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The changes passed the House of Representatives this week with bipartisan support.

Mr McGowan said the draft legislation may be not quite as good for WA as a revamp recommended by the Productivity Commission but "largely resolves" the issues the state is facing.

"I do think that the outcome that has been reached, which is by necessity a compromise, is a good compromise," he said.

He said the current system is "unsustainable and unreasonable", and discourages states from growing economically.

State and territory treasury officials used the hearing to note they thought the current GST system was working well, but acknowledged it is the commonwealth's call on whether it should change.

NSW believes the new system will give WA an advantage.

"This bill will ensure that WA will have a greater and increasing fiscal capacity than any other jurisdiction," NSW treasury's Natalie Horvat said.

Each of the states stressed it's impossible to know what the future will bring by way of economic conditions, making it important to have a permanent guarantee that no state will be worse off under the new system.

"The guarantee should be in perpetuity," Victorian treasury secretary David Martine said.

The federal government has agreed to make such a guarantee, but only for a transition period between 2021/22 and 2026/27.

An inquiry will be held in 2026/27 to check if the new system is working as it should.

Victoria has modelled six situations demonstrating things could work out differently to the one scenario the government has considered, which may be bad news for some states.

"There are other conceivable scenarios where states could be worse off financially," SA treasury deputy chief executive Stuart Hocking said.

Federal Treasury officials say the Victorian modelling hasn't taking into account all of the economic parameters and its own forecasting.